The Effect of Social Interaction on Economic Transactions: Evidence from Changes in Two Retail Formats

Posted: 16 Feb 2015 Last revised: 29 Jun 2015

See all articles by Avi Goldfarb

Avi Goldfarb

University of Toronto - Rotman School of Management

Ryan C. McDevitt

Fuqua Graduate School of Business - Duke University; Duke Innovation & Entrepreneurship Initiative

Sampsa Samila

University of Navarra, IESE Business School

Brian S. Silverman

University of Toronto - Rotman School of Management

Date Written: July 1, 2014

Abstract

Examining changes in two different retail formats, we show that consumers alter their purchases depending on the retail environment. In both settings, the change in behavior coincides with a reduction in the interpersonal interaction required to complete a transaction. As such, we contend that the format changes reduced a “social friction” that would otherwise inhibit consumers due to an implicit cost associated with ordering certain items in social settings.

Keywords: social cues, consumer choice, retail, social frictions

JEL Classification: D12, L81, L86

Suggested Citation

Goldfarb, Avi and McDevitt, Ryan C. and Samila, Sampsa and Silverman, Brian S., The Effect of Social Interaction on Economic Transactions: Evidence from Changes in Two Retail Formats (July 1, 2014). Management Science, Forthcoming; Rotman School of Management Working Paper No. 2565502. Available at SSRN: https://ssrn.com/abstract=2565502

Avi Goldfarb

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

Ryan C. McDevitt

Fuqua Graduate School of Business - Duke University ( email )

100 Fuqua Dr
Durham, NC 27708
United States

HOME PAGE: http://www.ryanmcdevitt.com

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Sampsa Samila (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Brian S. Silverman

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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